Hot Tub Builders sells to three retail dealers under an agreement wherein each dealer pays monthly. The average payments are $148,500, $162,900, and $74,500 from these dealers. Each payment has a collection delay of 1.5 days. What is the amount of the average daily receipts assuming each month has 30 days?

Question

Quizplus · Accepted Answer

To find the average daily receipts, we need to first calculate the total monthly payments from all three dealers:
Total monthly payments = $148,500 + $162,900 + $74,500
Total monthly payments = $386,900

Since each payment has a collection delay of 1.5 days, the total collection period per month is 4.5 days (1.5 days x 3 dealers). Therefore, the average daily receipts would be:

Average daily receipts = Total monthly payments / Collection period per month
Average daily receipts = $386,900 / 4.5
Average daily receipts = $85,977.78

However, we need to account for the fact that each month has 30 days. So, the amount of the average daily receipts would be:

Amount of average daily receipts = Average daily receipts x Number of collection periods per month
Amount of average daily receipts = $85,977.78 x (30 / 4.5)
Amount of average daily receipts = $85,977.78 x 6.67
Amount of average daily receipts = $572,848.97 / 30
Amount of average daily receipts = $12,863.30 (rounded to nearest cent)

Therefore, the best choice is B, $12,863.

Hot Tub Builders Sells to Three Retail Dealers Under an Agreement